Bull on red bull?

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It’s been so long since I have posted. Work has been crazy the past few months. I am just in the process of making some serious decisions right now.

Let’s get on with the market. The bull has been running the market for the last two months, but is the bull market really back? I have noticed that the bull is pulling the market higher on ligher volume. This is similar to what we saw the end of last year. All technical indicators are showing that the market is so overbought here. A correction is well needed to bring in some fresh money. Do keep in mind though the market can be in an overbought territory a lot longer than it would in a correction territory. I think the risk/reward favors taking a little bit off the table. It’s too risky here to keep chasing.

One thing to keep in mind is the action on the USD. As I have pointed out in my last post, the PIIGS are creating opportunities for strong support in USD. We clearly saw that yesterday. USD made an impressive move yesterday on the news of Portugal being downgraded. Hence, the market dropped. As a foreign investor in the US market, you really have to keep this inverse relationship in mind because a lot of the action on the US stock market has been driven by the dollar. At the end of the day, if you factor in the exchange rate, it could be a zero sum game.